Large chunk of $117 million in federal aid for Cedar Rapids may just be a loan

Water of the Cedar River laps at the top of the boat ramp at Sumner Park across from the federal courthouse in southwest Cedar Rapids, Iowa, on Wednesday, Sept. 5, 2018. (Jim Slosiarek/The Gazette)City council member Susie Weinacht takes a photo with Rep. Rod Blum, Sen. Chuck Grassley and Sen. Joni Ernst after a luncheon to recognize the Iowa congressional delegation for their role in securing federal flood protection funding on Wednesday, August 8, 2018, at the DoubleTree Hotel convention center in Cedar Rapids on Wednesday, Aug. 8, 2018. (Liz Martin/The Gazette)Senators Chuck Grassley and Joni Ernst and Rep. Rod Blum sit down for a luncheon to recognize the Iowa congressional delegation for their role in securing federal flood protection funding on Wednesday, August 8, 2018, at the DoubleTree Hotel convention center in Cedar Rapids on Wednesday, Aug. 8, 2018. (Liz Martin/The Gazette)

CEDAR RAPIDS — A large chunk of the $117 million in federal aid announced this summer to help pay for a Cedar Rapids flood protection system may actually just be a loan.

Cedar Rapids Mayor Brad Hart and City Manager Jeff Pomeranz questioned the financial commitment in an Aug. 8 letter they sent to U.S. Sens. Joni Ernst and Chuck Grassley, and Rep. Rod Blum. According to the letter, the city recently received verbal details from the Army Corps of Engineers, which announced the award in July, indicating Cedar Rapids would receive $117 million total but would have to repay part of the amount.

The city was told the amount committed to Cedar Rapids is 65 percent of the $117 million — or $76 million — while the remaining 35 percent — $41 million — will be a low-interest loan paid back over 30 years, according to the letter.

“Given the importance of this critical project, it is with grave concern that we ask for your immediate assistance regarding the risk of Cedar Rapids not receiving the full $117 million,” the letter stated.

Cedar Rapids is working on an estimated $550 million flood protection system, which would include a series of berms, walls, gates and pumps lining the east and west banks of the Cedar River. Inflation could bring the total to $750 million over the 20 years, which is how long it’s expected to take to build.

The federal influx was seen as major boost, especially since hopes for federal aid had begun to wane after years of receiving no funding following the $5.4 billion in damage and loss after the 2008 flood. The $117 million amount — announced by Ernst, R-Red Oak, Blum, R-Dubuque, and Iowa Gov. Kim Reynolds — was far greater than previous project outlines, which put the federal commitment in the $70 million to $80 million range.

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The city has committed $110 million to the project but still is facing a $342 million funding gap, “which will fall on the shoulders of local residents and businesses,” the letter from Hart and Pomeranz said. The letter urged the delegation to secure “the full $117 million as announced on July 5, 2018.”

“Receiving the full $117 million is inherent and critical to this project’s completion and success in protecting Cedar Rapids from another devastating disaster,” the letter said.

The funding discrepancy has come to light as Cedar Rapids mobilizes against another flood threat.

If $41 million of the federal funding is a loan, announcements by Blum, Ernst and Reynolds on July 5 about the $117 million award made no mention of it.

“I am pleased to inform you that we are receiving $117 million to complete the Cedar Rapids Flood Project,” Blum stated in a July 5 news release. “I have worked hard to ensure Cedar Rapids receives the needed federal funds to secure and protect the City of Five Seasons from future flooding disasters.”

In his statement, Grassley took a different approach, saying the federal money is going to a $117.48 million project and linked to a 2017 Army Corps report. That report broke down components of a $117.48 million east bank project to include $76.3 million in federal costs and $41.1 million in non-federal costs.

At the time, none of the federal delegation could clarify the funding plan.

“The way I understood it briefly on the phone today is it’s $117 million coming from the federal government,” Blum said in a July 5 interview with The Gazette.

When asked why it was so much more than the $76 million requested, Blum said, “That was my first reaction, too, ‘What? Get more than we asked for?’ So I’ll find out more this coming week. I was not about to dial that phone and start asking these kinds of questions. We’ll take it.”

After the Aug. 8 luncheon, speaking with a reporter, Blum said the increase was likely due to inflation, but also acknowledged the funding was more of a 65-35 split with the city likely to get around $75 million and repay the rest through low-interest loans.

A spokesperson for Blum declined to comment on Wednesday. Pomeranz also declined to comment, and Hart did not return a message on Wednesday.

Ernst’s spokeswoman Liz Bowman did not address the differing figures, but in a statement said, “This level of federal support for Cedar Rapids is something to celebrate. The previous administration had years to provide federal funds for the Cedar Rapids flood control project, after it was authorized in 2014. It took tireless efforts by Senators Grassley and Ernst, Congressman Blum and Trump administration officials to make this funding a reality for the people of Cedar Rapids.”